Beginning this week, Good says the USDA's weekly Crop Progress report will include an assessment of soybean conditions. Historically, there has been a positive relationship between the percentage of the crop rated in good or excellent condition at the end of the season and the magnitude of the U.S. average yield relative to trend.  Early season ratings are not always indicative of end-of-season ratings. On average, the percentage of the crop rated in good or excellent condition at the end of the season since 1986 was six points lower than at the beginning of the season. End-of-season ratings exceeded those at the start of the season in only four of those 26 years.

"Still, yield expectations will follow weather developments and condition ratings over the next three months," Good says.  

"On the demand side, the pace of exports and export sales will be one of the most important price factors as the world adjusts to the small South American crop and troubling economic conditions," he says. "Export commitments for the current year ending Aug. 31 exceed the USDA's projection of 1.315 billion bushels for the year, which is not unusual."

He adds that sales for delivery during the 2012-2013 marketing year had reached 393 million bushels as of May 24, the most ever for this early in the year, and that 77% of those sales were to China with 18% going to unknown destinations.  

"The small South American harvest and the strong pace of export sales suggest that soybean prices will be very sensitive to U.S. production prospects," Good says. "Substantial price swings are likely to continue, providing producers with opportunities for additional sales of the 2012 crop."